A massive shake-up in the UK benefits system has begun, with the first claims made for new universal credit payments.

Universal credit will merge several benefits and tax credits into one monthly payout.

It begins with a very small number of new claimants in Ashton-under-Lyne in Greater Manchester, but will eventually affect nearly eight million people.

Iain Duncan Smith, the work and pensions secretary, said the new system was about "changing people".

'Right not early'

The benefit is for working age people looking for work, and will replace income-based jobseeker's allowance, income-related employment and support allowance, income support, child tax credit, working tax credit, and housing benefit.

It is the central plank of a benefits overhaul, championed by Mr Duncan Smith, which the government says will mean people are always better off in work than on benefits.

It is also designed to simplify the welfare system by bringing a number of benefits together and reducing fraud and error.

However, some groups have raised concerns that the system is entirely dependent on a complex computer network which may not be ready or able to cope with millions of claims. They are also concerned that many potential claimants do not have access to the internet.

Labour's shadow work and pensions secretary Liam Byrne said that universal credit was "a fine idea that builds on Labour's tax credits revolution".

But he added: "The truth is the scheme is late, over budget, the IT system appears to be falling apart and even DWP [Department of Work and Pensions] ministers admit they haven't got a clue what is going on."

But speaking to the BBC's Today programme, Mr Duncan Smith defended the new system, saying "it's quicker, it's more accurate and it's easier to understand", and said the slow pace of the roll-out was designed to "get it right, not get it early".

Please turn on JavaScript. Media requires JavaScript to play.

Liam Byrne: "This is not the big shake-up we need in the benefits system"

"What we have to do is to start changing people, and that's what this system is about," he said, stressing that paying people on a monthly basis would reflect how the majority of workers are now paid.

"It's about trying to help those who are the most vulnerable to get ready for the world of work, and that will improve their lives dramatically."

Online claims

The key features of universal credit include:

A single, monthly payment which the government says mirrors the world of work, but charities say could create problems for personal money management

The inclusion of financial help to pay rent, which is currently paid directly to landlords

An online-only claiming process, with accounts also managed online

The benefit paid to households, rather than individuals, and put straight into bank accounts

Benefits automatically adjusted depending on earnings, which employers enter into a computer system called real-time information

Please turn on JavaScript. Media requires JavaScript to play.

This means that there will no longer be a ceiling of 16 hours of work a week, below which people can sign on and above which claims are cancelled.

This is set to benefit people like Darren Bailey, an agency worker, whose working hours fluctuate, meaning he has to keep making claims under the current system.

"I have five kids so I can't afford to mess about," he said. "Any system has got to be better than this system."

Budgeting

The government estimates 3.1 million households will be entitled to more benefits as a result of universal credit, while 2.8 million households will be entitled to less. However, nobody would lose out during the initial transition assuming their circumstances stayed the same, the government said.

All claims for universal credit will need to be made online

Across all households, ministers say there will be an average gain of £16 per month. The long-term cost to the government is £100m in current prices.

The only claimants to receive universal credit in the initial stages will be single, new claimants at a jobcentre in Ashton-under-Lyne.

Three other pilot projects - in Warrington, Oldham, and Wigan - have been delayed until July.

From October, newly unemployed people will make claims under the new system. Current benefits and tax credits will gradually be shifted to universal credit from spring 2014, with the whole process completed by 2017.

Benefits and grants charity Turn2us said that 43% of people whose benefits would be replaced by universal credit were not aware of the change.

"Once you look at the nuts and bolts, budgeting is not going to be easy especially for those with a small amount of money," said Alban Hawksworth, welfare benefits specialist at the charity.

Comment number 1174.

TaxGuzzler29th April 2013 - 17:51

In tough times the state/public sector, call it what you will, traditionally fakes 'austerity' by hacking services (welfare, benefits, etc). Its priority is to preserve the only things it really cares about: its own pay and pensions. These latest proposals divert a greater share of tax revenues into state pay-packets. By capping or scrapping benefits the state plunders a bigger percentage of GDP.

Comment number 1173.

mike29th April 2013 - 17:36

When is this government going to get things right.They say they are doing it for ash.The jobcentre do not help you get back into work. as a lot of you out there there is not a lot of jobs going.take me and a lots of others you do more than 16 hours a week they stop your benfites. so where dos that put usk in this new credit. I think the government should get the unerpolyment down and not put it up

Comment number 1169.

Comment number 1168.

WhoamI29th April 2013 - 17:35

Benefits are capped at £26000 - average pay. But average pay is subject to tax and NI. Benefits should be capped at average pay LESS tax and NI. Current plan still rewards those who make a career out of not working.

More should be done for those at the lowest level of support. £77 per week is too little. Narrow the gap.

Comment number 1167.

BootRap29th April 2013 - 17:35

1158.thegreatcob don't blame rich they pay more then their fair share taxes.----------No they don't. They pay some taxes and yes, probably more than most but what would you expect when they've collared most of the wealth. Now if more people had that money, that would mean more money being spent and higher tax income for gov. Not that I'm advocating collaring his wealth but you see the problem.

Comment number 1166.

humdingerboo29th April 2013 - 17:34

#1148.Richard

Great! So there's all that work to be done - give those people a job to do it. They need to be paid at least national minimum wage. If all they're getting is £60 a week in JSA or whatever the benefit now is, you can only expect them to do approximately 10 hours work in return.

Comment number 1165.

Soothseeker29th April 2013 - 17:34

1129.AndyC555

Andy, you made the mistake of posing an important question based on a sensible calculation, hence the numerous mark downs your post attracted. You must know that BBC threads really don't want, and actually won't tolerate, your rational approach to issues like public sector pensions. In future try keeping it relentlessly pro public sector, and anti-taxpayer. You'll get high praise.

Comment number 1161.

york190029th April 2013 - 17:26

1140.MCGibboThere must be something we can do that doesn't involve keeping people dependant on benefits_____________Yes there is employers pay living wages to every employee and not the minimum wage that they have to pay

Comment number 1158.

thegreatcob29th April 2013 - 17:23

the free ride is over for everyone. the government is going to cut expenses that means higher taxes and lower benefits for everyone. don't blame rich they pay more then their fair share taxes. it is poor who don't pull there weigh they by they rations will be cut. benefits are there to keep people from being naked, starving and freezing to death. you want more then that you need to work for it.

Comment number 1157.

Norman Brooke29th April 2013 - 17:23

1140. Try this one. Close all tax loopholes with vigour. Act on tax havens. Use the wealth to 1. Create jobs based upon skills the nation needs. 2. Build houses.

My take on the British model of Capitalism is that it is certainly better than Marxism but panders too much to individual greed rather than the National well being. Hence this recession and the negativity it has wrought.

Comment number 1156.

humdingerboo29th April 2013 - 17:21

#1140 "There must be something we can do that doesn't involve keeping people dependant on benefits."

There is probably something could be done. However, as a start, the policy makers would need to WANT the disadvantaged to have a better quality of life. Since those in power are wealthy themselves they have a vested interest in making the wealthy wealthier and keeping the disadvantaged down.

BBC links

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.